Renewable energy and macroeconomic efficiency of OECD and non-OECD economies

Abstract

This article analyzes the effects of renewable energy on the technical efficiency of 45 economies during the 2001-2002 period through data envelopment analysis (DEA). In our DEA model, labor, capital stock, and energy consumption are the three inputs and real GDP is the single output. Increasing the use of renewable energy improves an economy's technical efficiency. Conversely, increasing the input of traditional energy decreases technical efficiency. Compared to non-OECD economies, OECD economies have higher technical efficiency and a higher share of geothermal, solar, tide, and wind fuels in renewable energy. However, non-OECD economies have a higher share of renewable energy in their total energy supply than OECD economies. (c) 2007 Elsevier Ltd. All rights reserved.